Scotland's Property Scandal BBC Scotland Investigates


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Scotland's Property Scandal

Fiona Walker investigates allegations of corruption at Edinburgh Council in relation to housing repairs, and reveals that the council could face a legal bill of tens of millions.


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There are 200,000 people working in the building trade in Scotland. But

:00:12.:00:14.

the building trade in Scotland. But can you spot the professionals from

:00:14.:00:23.

the cowboys? I'm in Edinburgh, a city renowned for its magnificent

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architecture. But I've been looking at its attempts to conserve these

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buildings and I've uncovered allegations of fraud and

:00:32.:00:42.
:00:42.:01:04.

institutional corruption at the Edinburgh has some of the most

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historic buildings in the world. But could an attempt to save that

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history sometimes be hastening its decline? And ripping off ordinary

:01:12.:01:22.
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scots at the same time. In Comely Bank near the centre of Edinburgh,

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that's what Bruce Thompson thinks. We had a minor roof leak, which we

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were quoted around �760 by a contractor. But to make sure all

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his neighbours were happy and to make his historic tenement

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watertight again they called an officer from the council. He had

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one quick look at it and decided that it probably needed a new roof

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and would report back to his boss. And the next thing we heard we had

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a Statutory Notice telling us that The power is unique to Edinburgh.

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Other places have statutory notices but this specific power is unique

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to Edinburgh. The statutory notice Bruce is referring to is a power

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that only the City of Edinburgh Council has, to keep its unique

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buildings in good order. A superpower if you like. It means

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owners have to pay for the work stipulated by the council whether

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they like it or not. But back at Bruce's, it seemed the builders

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weren't just on the roof. Work went on and on and on, more and more

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scaffolding kept appearing, and we began to get a bit worried. As it

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turns out, Bruce was right to be worried. The council decided his

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building didn't just need a new roof, but a whole load of other

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work. We just kept seeing great big chunks of stone being carted up

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onto the roof and the contractors were polite and civil. We didn't

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have any problems that way but they'd obviously been advised that

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they weren't to speak to us about anything. There was certainly no

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communication at all about cost. And we received a letter and it

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tells the surveyor quite clearly on no account give these clients any

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indication of cost as they do change day by day. So you were

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expected to effectively have your cheque book open and let somebody

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else fill in the numbers? That's what it seemed to be like, yes.

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frustration, he used freedom of information laws to ask for details.

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He felt it was the only way he could find out what the builders

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were doing to his own home. Finally he received files and files of

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paperwork. But they weren't exactly enlightening. This is edited,

:03:41.:03:44.

blacked out to the extent that there's literally nothing to see,

:03:44.:03:54.
:03:54.:04:01.

page after page of it, I think. Another one, another one. I mean, I

:04:01.:04:04.

don't know what they think they're going to give away, but it is just

:04:04.:04:07.

stupid. Some of the Freedom of Information responses literally

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told him nothing at all. But tucked away in the papers was an email

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from a council official, describing Bruce's attempts to find out about

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the work at his own home as a moan letter. When you saw this?

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Horrified with that, horrified. And we sent that to the Chief Executive.

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Do you feel that's a respectable way to treat someone? I feel it's a

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disgusting way to treat anybody. The council now admit the email was

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totally unacceptable. The Council decided to use its unique Statutory

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Notice power once again. This time to get builders to overhaul the

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back wall at Bruce's tenement whilst they were fixing the roof. A

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job costing tens of thousands extra. It's not evenly done, it's up one

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side not the other side. There's cracks all-over the stonework.

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Bruce says he was told it would cost around �760 to fix the leak.

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But after the council got involved his bill leapt to more than

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�300,000. Almost a third of a million pounds.

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On a scale of one to 10, how happy are you with the work that has been

:05:18.:05:28.
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I hear of another case across the city where the council have put a

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statutory notice on the building. It's left the owners no choice

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about what work is getting done. It turns out Emma-Jane Condon has also

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had a leaky roof in her tenement. lot of times I'd get home and I'd

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look out there with all the green meshing hanging down and just think

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it was never going to end. Emma- Jane and her neighbours were told

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they could expect a �90,000 repair bill to fix the roof. But then

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curious things started to happen. So I was in here and the banging

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was going on and I saw that crack appear. The council had been using

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their superpower again. Emma-Jane got another statutory notice and

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then another and another allowing the builder to do expensive

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stonework. Scaffolding went back up. Sandstone stripped out from the

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walls of their building started appearing in the skip. The trouble

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was by the time we'd realised what they were doing they'd taken half

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of it out. One of my neighbours who's experienced in this kind of

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stonework - he works on buildings as an engineer - had looked at some

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of the stonework in the skip and it was his view that there was no need

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for that stone to be taken out of the building. So, they were taking

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out perfectly good stone and replacing it with hew stone,

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unnecessarily. When the scaffolding came down, the building appeared to

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have been given a makeover most of which, Emma-Jane believes, was

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simply cosmetic. The last we heard about the total cost of the

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sandstone was it was a quarter of a million pounds. I think that what

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they've done is seen this as an opportunity to do a Rolls-Royce job

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on a building that wasn't necessary. And we can't afford the Rolls-Royce.

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Emma-Jane and her neighbours expected a bill of around �90,000.

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It's now around �300,000. I don't know if the ultimate conclusion of

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this will be that I'll have to sell the flat because I can't afford the

:07:32.:07:42.
:07:42.:07:44.

I wanted to know if these bills could in fact be the real cost of

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what was needed to be done. Was it possible that the owners simply

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didn't want to pay? So I called in a couple of experts to look at

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Gordon Murdie has been a quantity surveyor in Edinburgh for 38 years.

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He has detailed experience of the statutory notice system and is used

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as an expert witness in court. John Addison is a conservation engineer

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brought in to work on high-profile projects across the country,

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:08:25.:08:28.

including Historic Scotland buildings. This is Bruce Thompson's

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situation, he's in Comely Bank Place. John, you've taken a good

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look at this property. assessment is that probably 95% of

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it wasn't necessary. It seems that they got a little bit carried away

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with themselves. It certainly surprised me that work on that

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scale should have been carried out. The contractors said that they were

:08:54.:09:02.

instructed to do all this work by the council. At Queen's Park Avenue,

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our experts examined Emma-Jane's �300,000 worth of work. I just

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wonder if they'd had a conservator to work on some of these features

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up there, trying to reproduce that. Looks a bit rough. As well as

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examining Emma-Jane's building we showed them a survey done six years

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before the first statutory notice. Our experts say it gave no

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indication major works was needed back then. They talked us through

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their findings. If I could just refer to this drawing which

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suggests the extent of the stonework repair as scheduled by

:09:37.:09:46.

the council, this doesn't look like �300,000 worth of work either.

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asked Gordon to give his opinion on a statutory notice. We asked if it

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was clear what work needed to be done. This is an enormous latitude.

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Repair, renew all defective and cracked stonework. The first step

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at that point is to define what exactly is to be repaired, what is

:10:04.:10:07.

to be renewed a stone schedule, a marked up drawing, define the costs.

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There isn't a single repair noted. So it strikes me as very odd that

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you've got an open-ended description of work on the stat

:10:15.:10:18.

notice, which starts off with the word repair and the record drawing

:10:18.:10:26.

as we see it doesn't actually have a single repair. Our experts have

:10:26.:10:28.

found unnecessary work, over- charging even work that might make

:10:28.:10:36.

a building worse. Driving around the city I can see

:10:36.:10:38.

how Edinburgh's international reputation hangs on the quality of

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its architecture. But perhaps Bruce's and Emma-Jane's were

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isolated cases? Well, I've come across dozens of people complaining

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about statutory notices right across the city. Each case is more

:10:53.:11:03.
:11:03.:11:05.

At Comely Bank Road, thousand of pounds of work was about to be

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carried out under statutory notice. But James McLean who's one of the

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owners challenged it. He says when he did, the council agreed some of

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the work didn't need to be done. In Trafalgar Street in Leith, Bonita

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Russell owns a cafe. She's having to close the business she's run for

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more than 20 years after the bill for roof repairs soared to almost

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�200,000. And also in Leith, on Commercial Street, Jeremy Pascoe

:11:27.:11:37.
:11:37.:11:42.

and his neighbours are expecting a It was becoming clear to me that

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Bruce and Emma-Jane weren't the only ones unhappy with statutory

:11:44.:11:54.
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I've arranged to meet someone who used to issue the kind of statutory

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notices we're talking about. His job was to decide what work needed

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to be done, get builders on site and then oversee the work. I'm

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hoping he will be able to give me a really good insight into what was

:12:06.:12:16.
:12:16.:12:25.

actually going on in the department He told me he had resigned, and he

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was worried some of his colleagues were too eager to hand out

:12:30.:12:35.

statutory notices. Basically, I think too many statutory notices

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were being served by my colleagues. It seems some for got they were

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serving the public and were too focused object on serving in thes.

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As a surveyor your job was to determine what work was needed. I

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suspected that builders were leading the job, adding more work,

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and the officers were signing off the statutory notice. If council

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officials were encouraged to hand out statutory notices, it goes some

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way to explain the huge rise we've seen in Edinburgh. Over five years

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the value of the building work has soared from �9 million in 2005 to

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�30 million in 2010. Some people have got very rich. This money can

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be a money spinner. The council also gets a stake. For it is role

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it gets 15% of the final bill. If the costs go up, everyone's a

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winner, except, of course, the homeowner who has to pay up. But

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statutory notices were never meant to be like this. The power was

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brought in to protect historic buildings, and to protect the

:13:49.:13:55.

people on the streets below. In one instant she was with us, the next

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she was gone. 11 years ago a waitress serve at Ryan's Bar in

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Princes Street was killed after two foot long stones fell on her from

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the third floor of the building. Eight people were injured. It

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happened in the afternoon when the street was packed. Christine Foster,

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from Australia, died in hospital less than an hour later. Her deaths

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with a cruel reminder of the importance of looking after

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Edinburgh's historic buildings. need statutory notice system, but

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we need the right statutory notice system. Not just in Edinburgh, but

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across the country. We need to preserve our built heritage, it's

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absolutely vital. Ewan Aitken is a minister and the former lead r of

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the City of Edinburgh Council. But for the last two years he has been

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raising concerns about the way the power is being used. There are

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issues about how decisions are made and what constitutes the need for a

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statutory notice and then once that's in place how that work seems

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to expand and expand and expand, all at the cost of the residents

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who have no communication and who end up paying the bill. He says he

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has evidence that builders doing the statutory notice work were

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lining their own pockets. He claims that 13 addresses were charged for

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top quality materials while the builders actually used very cheep

:15:18.:15:22.

alternatives, more appropriate for a garden shed than historic

:15:22.:15:27.

buildings. Surely, that would be fraud? A fraud, he says, he has the

:15:27.:15:35.

paperwork to prove. This is the prime example of what I to be, at

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least, illegal, if not corrupt, if those are two separate things, of

:15:39.:15:43.

activity going on. There is hard evidence of this. That moons people

:15:43.:15:47.

are being defrauded, in my view. It's not good enough to say, well,

:15:47.:15:50.

we just thought we would put this down instead. The specialify

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kaition, for which people are paying, should have been put on the

:15:54.:15:57.

roofs. It seems to me to be pretty black-and-white. You wonder what

:15:57.:16:01.

that means in terms of all the other work that has gone on.

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Whether or not it was what people were paying for. Ewan Aitken has

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passed this information to the police's Specialist Fraud Unit. So,

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we know that builders are being investigated. We know that

:16:13.:16:17.

homeowners are feeling they have been ripped off. We know that costs

:16:17.:16:24.

have escalated. There's more. Within the council we had heard the

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relationship between some officers and builders was far too cosy.

:16:28.:16:33.

There are allegations of trips to lap-dancing clubs. This year,

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around 15% of the council's Property Conservation Department

:16:36.:16:40.

have been suspended. The council says the suspensions are,

:16:40.:16:45.

"precautionary". We also know the council's hospitality records, up

:16:45.:16:50.

to 2009, have been lost. To find out more about this relationship

:16:50.:16:54.

between council officials and builders, possibly even amounting

:16:54.:17:00.

to corruption, I went back to our informant. He told me that the

:17:00.:17:06.

system was wide open to abuse, including bribery. In theory, it

:17:06.:17:12.

would have been easy to a add costs to the notice. The checks were lax.

:17:12.:17:16.

The contractor would get money they weren't entitled to. Once, a

:17:16.:17:20.

contractor offered me a free kitchen or a free bathroom. I

:17:20.:17:23.

suspect, if I'd said yes, it probably would have happened.he was

:17:23.:17:27.

throwing out a fishing line and seeing if I took the hook. I don't

:17:27.:17:32.

know what anyone else was offered. It was a relationship that, I think,

:17:32.:17:42.
:17:42.:17:43.

We can't verify that what our surveyor is saying about the

:17:43.:17:47.

builders and council officials is true. But Lothian and Borders

:17:47.:17:53.

Police have now set up a fraud and corruption investigation. It even

:17:53.:17:58.

involves claims that a surveyor, within the council's Property

:17:58.:18:01.

Conservation Department, enjoyed holidays, paid for by a building

:18:01.:18:08.

contractor. We believe this contractor was given work totalling

:18:08.:18:11.

millions of pounds through the statutory notice repairs scheme. In

:18:11.:18:14.

fact, the more I look at the Property Conservation Department,

:18:14.:18:18.

the more worrying it seems. The most serious of all the allegations,

:18:18.:18:22.

we believe the police are looking at, is whether some council

:18:22.:18:25.

officials were taking bribes or a cut to give builders millions of

:18:25.:18:34.

pounds worth of work. This could amount to institutional corruption.

:18:34.:18:40.

How the council awarded contracts to builders is highly controversial.

:18:40.:18:46.

In our investigation, one company's name keeps cropping up, Action

:18:46.:18:54.

Building Contracts. We tracked down one job that Action were involved

:18:54.:19:00.

with at Newtoft Street in Gilmerton. Clark Wilson bought his flat there

:19:00.:19:07.

in 1998. In 200, the window above the Close came crashing down into

:19:07.:19:10.

the stairwell. Action Building Contracts were brought in by the

:19:10.:19:13.

council. The statutory notice instructed the builders to do some

:19:13.:19:18.

extra work, but not things like new guttering and a new chimney, which

:19:18.:19:27.

is exactly what Clark got, costing tens of thousands. You weren't even

:19:27.:19:32.

told this guttering needed to be replaced or any of the roof work?

:19:32.:19:37.

No, it had just been done. initial quote from Action was just

:19:37.:19:40.

over �25,000. When he and his neighbours received the final bill,

:19:40.:19:44.

the total cost of the building work had increased to almost �80,000. A

:19:44.:19:51.

figure that brought on a feeling of sheer panic. It was like a bad

:19:51.:19:55.

dream. You weren't going to get away from it. It's something that

:19:55.:19:59.

you continually worry about, the final bill. It's just out of my

:19:59.:20:05.

league. People just don't have that lying about. We have a dossier of

:20:05.:20:10.

information on Clark's case, our experts agreed to take a closer

:20:10.:20:15.

look. It would have been a simple job to re-point that crack and tidy

:20:15.:20:18.

tup. They have been examining the extra work carried out and how much

:20:18.:20:23.

it cost. What caught their eye was how the price of materials had

:20:23.:20:31.

jumped by the time it appeared in the final bill. The final account

:20:31.:20:36.

is your check out bill. I don't understand why something priced on

:20:36.:20:40.

the shelve at a certain rate, at the checkout, in the final account,

:20:40.:20:44.

is double the rate. It wouldn't happen in the supermarket, it

:20:44.:20:47.

certainly doesn't happen in construction contracts. In my line

:20:47.:20:51.

of work, I'd hang my head in shame if I ever had to report to the

:20:51.:20:55.

client that a job had leapt up like that without any cost control.

:20:55.:21:00.

According to our experts, Clark is the victim of gross overcharging.

:21:00.:21:03.

His final bill from Action was almost three times the initial

:21:03.:21:07.

quote. We have been investigating this story trout -- throughout the

:21:07.:21:10.

summer, hearing concerns about price rice rises and alleged

:21:10.:21:14.

corruption in the system. A few days ago we got hold of evidence

:21:14.:21:17.

that finally proved that council officials were breaking their own

:21:17.:21:20.

rules. That builders were making money out of contracts they

:21:20.:21:26.

shouldn't have been awarded. Once again, Action Building Contracts's

:21:26.:21:36.
:21:36.:21:39.

name came up. This time, it was at Fowler Terrace in the Polwarth area.

:21:39.:21:43.

Trevor Thompson runs a business consultancy. The statutory notice

:21:43.:21:49.

arrived and the quotation seemed fair, but it didn't go quite as

:21:49.:21:52.

he'd expected. The materials used are breaking down the stone work

:21:52.:21:56.

rather than fix it. When Trevor Thompson looked at the break down

:21:56.:21:59.

of cost he found evidence, he says, the company had hidden charges in

:21:59.:22:07.

the final bill. What they've done, they have used this to fabricate

:22:07.:22:11.

�15,000 charge for scaffolding for additional times because they said

:22:11.:22:16.

the job was bigger than it was. This �15,000 is an additional cost

:22:16.:22:20.

borne by the people here, for this project. Two other builders have

:22:20.:22:26.

taken a look at these costs and the craftsmanship. They believe Trevor

:22:26.:22:29.

and his neighbours have been overcharged by �40,000. They will

:22:29.:22:34.

need to spend another �40,000 to fix all the problems. One of the

:22:34.:22:39.

reasons why the contractor won this was, apparently, that the other

:22:39.:22:45.

contracts had a heavy workload. Here we have an e-mail from the

:22:45.:22:49.

council's representative saying that the other -- indeed the other

:22:50.:22:57.

companies were in fact busy. This was a key bit of information I

:22:57.:23:02.

could check out for myself. We were in a building recession in 2008,

:23:02.:23:09.

when Action were awarded the contract. I've just come off the

:23:09.:23:13.

MOBILE PHONE RINGS To a contractor who said he was available for work.

:23:13.:23:19.

He was begging for work at the time. Another contractor said it was,

:23:19.:23:24.

"jobs for the boys".he felt that some council officials were handing

:23:24.:23:27.

out work to favourite firms rather than the most competitive tender.

:23:27.:23:30.

In the space of two years, Action Building Contracts were paid nearly

:23:30.:23:34.

�2 million by the council. Throughout this time, they weren't

:23:34.:23:41.

on the council's approved list of frame work contractors. My gut

:23:41.:23:44.

feeling is that somebody has made from this. Why would somebody

:23:44.:23:50.

choose not to use the correct procurement system? There must be

:23:50.:23:57.

some element in there of gain because it's either neglect, or

:23:57.:24:01.

personal gain, I'm afraid. Action Building Contracts declined to

:24:01.:24:08.

comment. As did the council on this case. As well as questions about

:24:09.:24:12.

individual building firms, Ewan Aitken, the former council leader,

:24:12.:24:16.

is worried that this scandal has undermined confidence in the

:24:16.:24:23.

council itself. I have seen what appears to be strange decisions,

:24:23.:24:26.

unexplained decisions, about who gets work, and that worries me

:24:26.:24:30.

deeply. I've been asking questions, public questions, questions on the

:24:30.:24:34.

public record about that and not got answers answers. Do you believe

:24:34.:24:38.

that there are people on the pay roll on the City of Edinburgh

:24:38.:24:42.

Council who are corrupt? convinced there is something that

:24:42.:24:48.

has been illegal that has gone on and that has involved a few council

:24:48.:24:53.

officers. He believes the situation is so serious that it warrants

:24:53.:24:58.

radical action. I think we need to review every case, at least back to

:24:58.:25:04.

2005, to say - how was the notice put in place? What was the decision

:25:04.:25:08.

about what work needed to be done? How was that communicated to the

:25:08.:25:13.

residents? How was the tender put in place and who got the work and

:25:13.:25:18.

why they got the work? Until we do that, we won't have understood

:25:18.:25:25.

whether or not people have paid money who shouldn't have had to

:25:25.:25:29.

because because of the practice that has again on in the council.

:25:29.:25:33.

think if you look back at the statutory notices served in the

:25:33.:25:38.

last five years you would find hundreds were invalid. If

:25:38.:25:41.

homeowners in Edinburgh looked closely at the justification for

:25:41.:25:46.

why their notice was issued they might be shocked. In a statement

:25:46.:25:49.

the City of Edinburgh Council said they commissioned an independent

:25:49.:25:53.

auditor to investigate allegations of wrong-doing. They added that the

:25:53.:25:58.

division -- division to have an independent investigation was, "a

:25:58.:26:03.

sign of how seriously we take the complaints and concerns that have

:26:03.:26:10.

been raised an our commitment to addressing them". A report updating

:26:10.:26:13.

councillors about the audit or's investigation is expected to go

:26:13.:26:19.

before the full council next month. With about 3,000 statutory notices

:26:19.:26:22.

served every year and many home owners in Edinburgh now contracting

:26:22.:26:26.

lawyers, this could become an expensive legal nightmare for City

:26:26.:26:31.

of Edinburgh Council. But just how serious? I think it's, deeply

:26:31.:26:41.
:26:41.:26:43.

serious. It's tens of millions, potentially. The council officials

:26:43.:26:48.

tend to think they are little Gods sitting on their pedestals, just

:26:48.:26:57.

got every power in the world,. Just do exactly what they want. If you

:26:57.:27:00.

look at all the scaffolding up around Edinburgh, it's all over the

:27:01.:27:08.

place. So, it felt like it was a licence for them to print money.

:27:08.:27:11.

I'm just jord Joe Bloggs on the street. Most people haven't been up

:27:11.:27:16.

on a roof, or done anything like that in their life. You take it

:27:16.:27:21.

from the experts are meant to be professionals who you can trust.

:27:21.:27:24.

Not so long ago the City's statutory notice system was the

:27:24.:27:30.

envy of other cities around Britain. That system is in a mess. In the

:27:30.:27:34.

coming months, the council's own investigation will be reporting

:27:34.:27:38.

back, hone homeowners will be taking legal action and the police

:27:38.:27:43.

pursuing allegations of fraud and corruption. There's no doubt that

:27:43.:27:48.

Edinburgh's buildings need to be con served, but what we've

:27:48.:27:51.

uncovered could discredit the very system which was meant to protect

:27:51.:27:56.

them. This is Edinburgh. This is the world World Heritage Site. It

:27:56.:28:00.

has Historic Scotland, it has the National Trust. It has all the

:28:00.:28:03.

important bodies that have established the policies and fee

:28:03.:28:08.

loz loss fees for conservation in Scotland. For this to happen in the

:28:08.:28:14.

centre of this, the centre of excellence, if you like, suggests

:28:14.:28:18.

something terribly, terribly wrong. Do you think there will be

:28:18.:28:23.

BBC Scotland Investigates allegations of wrongdoing and corruption in the City of Edinburgh Council.

With council staff suspended and a police investigation under way, reporter Fiona Walker hears from homeowners who feel they've been ripped off after their housing repair bills have rocketed. Edinburgh is proud to have some of the most beautiful and important architecture in Britain but could the very system that is meant to be saving the city's buildings actually be the Capital's next shame? The programme examines Edinburgh's multi-million pound housing repairs system and hears claims that people have been left with massive debts.

The programme also reveals that the council - already dogged by the trams fiasco - could be facing a legal bill of tens of millions of pounds.